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How to easily apply for a home equity line of credit (HELOC)

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When you’re planning for major ongoing expenses, consolidating debts, or need emergency cash, a home equity line of credit (HELOC) is a convenient way to get cash. Applicants may apply by phone, online, or in-person for a HELOC. 

You’ll probably need to discuss the following with your lender when you’re ready to apply:

  • What is the value of your home?
  • Would you like to apply by yourself or with a co-applicant?
  • Does the collateral property belong to you?

What is the process of obtaining a home equity loan?

HELOC applications are similar to mortgage purchases and refinances. The same documents must be provided, as well as proof of your creditworthiness. The steps for an easy application for home equity lines of credit are as follows:

  1. Find out how much equity you have with a HELOC calculator.
  2. Shop around for HELOC lenders once you know how much you can borrow.
  3. Make sure you have all the required documents before applying.
  4. Following the completion of your documentation and choosing a lender, you can apply for the HELOC.
  5. You will be given disclosure documents. Review them and then discuss them with the lender. Ensure the loan meets your needs. Getting your mortgage underwritten, although not as intensive, can take weeks.
  6. The final step involves signing documents and gaining access to the loan. Your home’s equity can be used as collateral for a home equity loan, so you do not need to have a good credit score. 

You may lose your home if you somehow cannot pay your loan. Your lender will be entitled to possession of your property if you default.

Benefits of Home Equity Loan.

  • Easy to get since they are secured loans. As this is a secured loan, you can be approved even with a poor credit score.
  • Utilises otherwise unused financial assets.
  • Allows you to cover any significant expenses you may have since you are paid in one lump sum.
  • The interest rate is fixed throughout the term, so planning and managing expenses are more manageable.

Benefits of Home Equity Line of Credit.

  • You can borrow only a portion of the credit limit if you need it.
  • You can reborrow the loan amount with this revolving credit facility.
  • This is ideal if you intend to make payments in stages since you can withdraw loan amounts continuously.
  • There is only interest in the amount borrowed.

In a nutshell.

At some point, you may require access to extra cash. A second mortgage is a viable option in such a situation. It is a secured loan, meaning lenders can offer lower interest rates because your home provides collateral.

A home equity loan or HELOC comes with an extra loan payment, which you should account for in your monthly budget. Moreover, the bank will place a second lien on the home. In this case, your home will be at risk of foreclosure if you are unable to make the payments.

Photo by Towfiqu barbhuiya on Unsplash

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